Investors know that all municipal bond funds are not created equally. But until recently, they lacked the tools to put their muni bond funds? holdings under the same microscope routinely used to review and rate stock funds. Bondview, LLC has developed a new granular approach to fund rating that empowers investors for the first time to see the details and performance criteria of the municipal bonds within a fund.
Municipal bonds are unique in the investment marketplace due to their lack of liquidity and transparency. “The funds that hold these bonds deserve the same thorough review as other investments,? said Robert Kane, Bondview CEO. Currently, most of the bond fund rating industry applies rating methods that rely solely on past performance, rather than a holistic approach that examines a fund?s bond holdings and current risks as perceived in the marketplace.
What BondView has done is handed investors a powerful microscope for funds composed of municipal bonds. ?Our special sauce is that Bondview ratings are based on a grassroots foundation that reviews each bond on a granular level. So while other bond fund raters are handicapped by ?best guessing? ratings based on risk-adjusted past performance, Bondview uses up-to-the-minute intel on every bond within every fund we rate,? explained Kane.
These exclusive ratings available free to investors and their advisors.
Regulators are increasingly scrutinizing the transparency ? or lack thereof ? of municipal bond funds. In May 2010, the Securities and Exchange Commission launched an investigation of the municipal bond market. Since then, the SEC and Municipal Securities Rulemaking Board, which oversee municipal bond issuers and sellers, have proposed or passed rules designed to increase disclosure of information about municipal bonds.
BondView has been rating individual bonds for the past two years. Those ratings are based on a proprietary approach that does not use third-party credit ratings from S&P, Moody?s or Fitch. Starting today, investors will be able to go to BondView’s website and access real-time ratings for the about 100 open-end and closed-end municipal bond funds. Over the next several months, the firm hopes to make ratings available for all municipal bond funds. All of the ratings will be available for free on the firm’s website.
The fund ratings are based on five criteria: Market Pricing, Duration, Income Stream and Maturity, Market Sector and Diversification. Each fund will be rated between A-F for each category and assigned an overall score, Mr. Kane said.
Declining tax revenues and increasing pension obligations are contributing to uncertain economic times for some municipal bonds. We believe that understanding the fundamentals and current risks of each muni bond in a fund is more important than the past performance of the fund. ?Otherwise, you?re looking thru a rear-view mirror and that will be a problem going forward said Kane.
The ability to rate municipal bond funds is a natural progression from BondView?s recently announced muni bond stress test. Bondview plans to release a similar stress test for muni bond portfolios and bond funds in mid-June 2011.
?The muni bond market is really like 1,000 little bazaars, each specializing in a size or color of the 50,000 local bond issuers,? said Kane. ?These 50,000 issues are a fascinating market microcosm. They don?t perform like stocks, like other bonds, or like mutual funds. They?re unique due to lack of liquidity and transparency.? Kane continued. BondView is the first company to track individual municipal bonds synced to bond funds.
It?s high time investors got the same holding-by-holding analysis of their muni bonds funds as they?ve always had for their stock-based funds,? said Kane.
Facts: Bondview?s ratings are powered by the company?s unique repository of data that spans 10 years? worth of transactions from 50,000 active state and local bond issuers, as represented by 1.3 million bond cusips across the entire $ 2.9 trillion municipal bond market. The Bondview repository covers all individual muni bonds, their complete trading history, estimated current prices, yield curves, dealer trading ranges, and the company?s proprietary market ratings criteria for each bond: Market, Yield, Volatility, Liquidity and Summary.
Company Information: BondView is the leading investor advocate for municipal bonds. ?As municipal bonds become more popular, and investors become more sophisticated, we want BondView.com to be their go-to resource. We continue to add free, leading-edge features for both muni bond investors and their financial advisors,? concluded Kane.
BondView, LLC. provides municipal bond portfolio analysis and market data for investors and professionals. Our mission is to promote smart, informed decision making by municipal bond investors and their advisors. The site BondView.com provides high-level, top-down monitoring and quantitative analysis of individual bonds or an entire bond portfolio, no matter where it is housed. BondView is dedicated to providing timely, accurate, real-world market data specific to municipal bonds and municipal bond funds. Its suite of tools and services continues to evolve. The Bondview Municipal Bond Ratings are available now at http://www.bondview.com/funds/index
For more information contact: Robert Kane at BondView, LLC.
Telephone: 866-261-9533. news(at)bondview(dot)com , http://www.bondview.com.
207 Mineola Ave., Suite 217, Rosyln Heights, NY 11577.
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